Captive
re/insurance
in Ireland
March 2014
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Captive re/insurance in Ireland
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What is a captive?
A captive is defined by the Central Bank of Ireland (CBI)* as:
“An insurance or reinsurance undertaking, owned either by a financial undertaking
other than an insurance or reinsurance undertaking or a group of insurance or
reinsurance undertakings within the meaning of point (c) of Article 212(1) of Directive
2009/138/EC (the Solvency II Directive) or by a non-financial undertaking, the purpose
of which is to provide insurance or reinsurance cover exclusively for the risks of the
undertaking or undertakings to which it belongs or of an undertaking or undertakings of
the group of which it is a member.”
Captive re/insurance companies are used as a risk management tool by their parent companies
and can assist parent companies by: reducing insurance costs; gaining access to reinsurers;
providing solutions for risks that may not be easily insurable in the traditional risk transfer market;
and providing greater risk management control, as well as control of own loss data.
*The Central Bank of Ireland (CBI) is responsible for financial regulation in Ireland
Types of captives in Ireland
There are more than 100 insurance and reinsurance captives in Dublin. The types of risks
underwritten by captives in Ireland include traditional risks such as:

accident

sickness

aircraft

property damage

business interruption

goods in transit

motor vehicle liability

credit

employers’ liability

general liability
Classes 1-18 as defined by the CBI are covered by captives and the full list of classes can be
viewed here.
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Captive insurers and reinsurers also cover non-traditional risks such as:

employee benefits, including US employee benefits through US-domiciled
branches of Irish captives

product liability

miscellaneous financial loss

workers’ compensation retentions
Captives and DIMA
DIMA (Dublin International Insurance & Management Association) was founded in 1990 to
represent the emerging international re/insurance industry in Ireland, including self-managed
captives and captive management companies. Captives remain a key element of DIMA’s
membership.
DIMA engages continuously with Irish, European and other authorities globally to best represent
its members’ interests, and has been highly active in the development of captive-related
provisions within Solvency II, the new regulatory framework for the European re/insurance
industry. DIMA has been awarded “Solvency II initiative of the year” in both 2013 and 2014 for its
work on developing corporate governance and risk assessment programmes. DIMA’s CEO Sarah
Goddard is ranked #25 in the list of Power 50 global influencers for the captives industry.
DIMA promotes high business and ethical standards within the Irish international re/insurance
community through education and training, and the provision of relevant market information.
DIMA is an observer member of the IAIS (International Association of Insurance Supervisors), a
founder member of the GFIA (Global Federation of Insurance Associations) and is represented
on the executive committee of IFSC Ireland and on the IFSC Insurance Working Group, under
Ireland’s Clearing House Group.
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Why Ireland? A captivating place for business
Many different factors have contributed to Ireland’s success as a captive re/insurance centre.
These include:

Ireland is a recognised leading captive domicile centre with 25 years’ history and
expertise;

the market has a deep pool of experienced and emerging talent with a wealth of
re/insurance expertise ranging from operations, underwriting, accounting, auditing, tax
and actuarial to legal and compliance, with specific captive market expertise;

Ireland is ranked #1 in Forbes magazine’s “best countries for business” 2013;

Ireland is ranked #1 for foreign direct investment and technology transfer, according to
the World Economic Forum’s Global Competitiveness Report 2012-2013;

DIMA offers a collegiate environment for captives via its sub-committee structure, as well
as representing the interests of the captive community;

geographically, Ireland is an excellent location to access EU/European, US, Middle
Eastern and Asian markets;

captives can avail of EU FOE (freedom of establishment) or FOS (freedom of services)
from a base in Ireland without the need for local representation in EU/EEA countries;

under FOS provisions, a captive insurer can cover pan-European insurance programmes
on a direct basis;

the CBI provides a robust and predictable supervisory function which incorporates the
principle of proportionality for the captive market. An example of this is the corporate
governance code for captive insurance and reinsurance entities;

double taxation treaties with 70 countries;

Federal Excise Tax (FET) exemption is in place under the US-Ireland double taxation
treaty (subject to certain conditions being met);

12.5% corporation tax rate;

no general thin capitalisation rules;

no capital duty;

no stamp duty or insurance premium tax where a risk is located outside Ireland.
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Authorisation process
All captive insurance and reinsurance undertakings are regulated by the Central Bank of Ireland
(CBI) and are required to undergo an authorisation process in order to obtain a license.
Non-life insurance captive undertakings should access the Checklist for completing and
submitting a captive non-life insurance application for more details on making an application to
the CBI.
Non-life reinsurance captive undertakings should access the Checklist for completing and
submitting a captive non-life reinsurance application for more details on making an application to
the CBI.
Alternatively, interested parties can contact any of the captive management companies in Ireland.
See the DIMA members listing on www.dima.ie for a list of captive management companies in
Ireland.
For entities seeking to set up a special purpose reinsurance vehicle (SPRV) in Ireland, the
CBI’s checklist for completing and submitting special purpose reinsurance vehicle applications
under the reinsurance regulations (S.I. 380 of 2006) can be found here.
Application fees and annual levies
Currently the CBI does not charge a fee for re/insurance license applications.
Where a company is subject to regulation by the CBI, fees are aligned with the regulated entity’s
PRISM* rating. The table below shows the most recent fee levels for re/insurers in each of the
PRISM impact categories:
2013 Funding Levy fee table
Impact Category
Low
Medium
Low
Medium High
High
Ultra High
Levy
€8,369**
€25,233
€126,929
€555,122
€1,223,409***
* PRISM is the CBI’s “Probability Risk and Impact SysteM” which is a systemic risk-based framework against which
the CBI assesses supervisory requirements.
** Most Irish regulated captives fall within the low or medium/low categories
*** This rating is aimed at major Irish retail insurers and banks
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The CBI introduced its Probability Risk and Impact SysteM (PRISM) framework in late 2011. The
ratings are set according to the systemic risk posed by regulated entities, and firms are assigned
one of the following categories:

Super High ‒ Firms that pose the greatest systemic risk and require the highest levels of
supervision.

High ‒ Firms that pose a high systemic risk and require a high level of supervision.

Medium/High ‒ Firms that pose some systemic risk and require quite a high level of
supervision.

Medium/Low ‒ Firms that pose a small amount of systemic risk and require a moderate
amount of supervision.

Low ‒ Firms that pose little or no systemic risk. Pure captives come under this rating and
they require minimal supervision. (It is worth noting that due to the level of trust implicit in
this category, if “Low” firms are in breach of regulations, the resulting penalties are
proportionately higher.)
Capital requirements
Under the current Solvency I regime the minimum guarantee fund and solvency margin are as
follows:
Minimum guarantee fund:

€2.5-€3.7m for captive insurance undertakings

€1.2m for captive reinsurance undertakings
Solvency margin:
 125% for captives writing pure property (classes 8 and 9) and ancillary business services
(class 16)
 150% for all other classes
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CBI regulatory requirements
Captive insurance and captive reinsurance undertakings are required to comply with the CBI’s
Corporate Governance Code for Captive Insurance and Captive Reinsurance Undertakings and
the Fitness and Probity standards.

Full details of the Captive Corporate Governance Code and FAQs can be accessed
here.

Full details of the Fitness and Probity standards along with FAQs can be accessed here.
The following guidelines are applicable for captive non-life insurance undertakings:

Operational guidance applicable to captive insurance undertakings
The following guidelines may apply to some captive non-life insurance undertakings:

General good requirements for insurance and reinsurance companies

Guidelines for insurance companies on the risk management of derivatives

Guidelines for insurance companies on asset management

Guidelines on the actuarial certification of the technical reserves of non-life companies
Further information on the various non-life insurance guidelines can be accessed here.
The following guidelines are applicable for captive non-life reinsurance undertakings:

Requirements for non-life reinsurance undertakings
The following guidelines may apply to some captive non-life reinsurance undertakings:

General good requirements for insurance and reinsurance companies

Guidelines for insurance companies on asset management

Guidelines on the reinsurance cover of primary insurers and the security of their
reinsurers
Further information on the various non-life reinsurance guidelines can be accessed here.
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Legislation
These are some of the main pieces of legislation applicable to captive insurance and reinsurance
undertakings.
Legal requirements for captive insurance undertakings
Insurance Act, 1936, Insurance (Amendment) Act, 1938
Central Bank and Financial Services Authority of Ireland Act 2004
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010
A more exhaustive list of relevant Acts and statutory instruments is available from the CBI
website here.
Legal requirements for captive reinsurance undertakings
Central Bank Act 1942
Insurance Act 1989, 2000
S.I. 380 of 2006 ‒ European Communities (Reinsurance) Regulations 2006
A more exhaustive list of relevant Acts and statutory instruments is available from the CBI
website here.
Other Acts of importance to captive insurance and reinsurance undertakings
Companies Acts 1963-2012
http://www.cro.ie/en/downloads-legislation-company.aspx
Data Protection Act 1988-2003
http://dataprotection.ie/docs/LAW-ON-DATA-PROTECTION/795.htm
The data protection website also has links to EU data protection legislation.
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Solvency II
Solvency II is a new risk-based regulatory regime for the EU’s re/insurance industry. It is
anticipated that Solvency II will commence on 1 January 2016 and existing minimum capital
requirements will be modified as part of the far-reaching changes to be implemented under the
Solvency II programme.
In light of EIOPA's* request for national regulatory authorities to implement interim measures in
advance of Solvency II, the CBI has produced Guidelines on Preparing for Solvency II.
Proportionality has been applied and CBI has aligned the guidelines with PRISM. The Guidelines
on Preparing for Solvency II include:

System of governance (including risk management systems)

Forward looking assessment of own risks

Submission of information

Pre-application for internal models
The guidelines apply from 1 January 2014 until the implementation of Solvency II.
The CBI guidelines and additional information on preparing for Solvency II can be accessed here,
and updates from the CBI on Solvency II can be accessed here.
EIOPA’s guidelines on preparing for Solvency II can be accessed here.
The Solvency II Directive can be accessed here.
* EIOPA is the European Insurance and Occupational Pensions Authority, which is part of the European System of
Financial Supervision. It is an independent advisory body to the European Parliament, the Council of the European
Union and the European Commission.
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Useful links
Regulation
Central Bank of Ireland
The Central Bank of Ireland (CBI) regulates financial institutions based in Ireland, as well as
being responsible for the stability of Ireland’s financial system, resolution of financial difficulties in
credit institutions, protection of consumers of financial services, and providing independent
economic advice and high quality financial statistics.
http://www.centralbank.ie
The Data Protection Commissioner
Companies are required to ensure they are compliant with the Data Protection Act.
http://www.dataprotection.ie/
Financial Ombudsman
The Financial Services Ombudsman is a statutory officer who deals independently with
unresolved complaints from consumers about their individual dealings with financial service
providers.
http://financialombudsman.ie/
National Consumer Agency
The National Consumer Agency (NCA) is a statutory body established by the Irish Government to
enforce consumer law and promote consumer rights.
http://www.consumerhelp.ie
EIOPA
EIOPA is part of the European System of Financial Supervision. Its core responsibilities are to
support the stability of the financial system, transparency of markets and financial products as
well as the protection of insurance policyholders, pension scheme members and beneficiaries.
https://eiopa.europa.eu/
International Association of Insurance Supervisors
The International Association of Insurance Supervisors (IAIS) represents insurance regulators
and supervisors of more than 200 jurisdictions in nearly 140 countries. Its objectives are to
promote effective and globally consistent supervision of the insurance industry in order to
develop and maintain fair, safe and stable insurance markets for the benefit and protection of
policyholders, and to contribute to global financial stability.
http://www.iaisweb.org/
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General legislation
Irish Statute Book
A directory of all Acts and statutory instruments from 1922 to present day.
http://www.irishstatutebook.ie
Company Law
Companies Registration Office
The Companies Registration Office is the central repository of public statutory information on Irish
companies and business names.
http://www.cro.ie
Office of the Director of Corporate Enforcement
The Office of the Director of Corporate Enforcement (ODCE) ensures company law is upheld.
http://www.odce.ie/
Taxation
Revenue Commissioners
The Revenue Commissioners are responsible for the collection of personal and company tax.
http://www.revenue.ie/en/index.html
Government departments and semi-state bodies
Department of An Taoiseach
The office of the Taoiseach (Irish Prime Minister) is responsible for Ireland’s state policy.
http://www.taoiseach.gov.ie/eng
Department of Finance
The Department of Finance is responsible for financial administration and financial strategy.
http://www.finance.gov.ie/
Department of Jobs, Enterprise & Innovation
The Department of Jobs, Enterprise & Innovation is responsible for job creation and a competitive
business environment.
http://www.enterprise.gov.ie/
IDA Ireland
IDA Ireland is an Irish government-backed agency which provides information and advice on
setting up and investing in Ireland.
http://www.idaireland.com/
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